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April 09, 2005

The Forces Shaping Mobile Media (1 of 3)

Putting the DRM back in Dramamine

“What is it about the phrase ‘Digital Rights Management’ that causes an overwhelming sense of sleepiness to kick in?”
- Julene Snyder, Industry Standard

I remember when Julene said that back in 1999 during the “MP3 revolution.” The MP3 format was such a threat to the music industry that they got together and created the SDMI – Secure Digital Music Initiative, a world-traveling cadre of at least 147 music and technology interested parties with a charter “to develop open technology specifications that protect the playing, storing, and distributing of digital music such that a new market for digital music may emerge.” While it was a brave endeavor, it ended in May of 2001 with a terse statement: “it was determined that there is not yet consensus for adoption of any combination of the proposed technologies.”

Which brings us to Conahan’s First Law of Digital Media Distribution: “Your ability to develop and agree upon a technology standard is inversely proportional to the number of people you involve in the development of and agreement upon a technology standard.”

In fact, a standard was agreed upon for digital music: the MP3 format. It just wasn’t a secure standard, and it wasn’t agreed upon by the music industry.

While SDMI was widely criticized for being nothing more than an international boondoggle for its participants, (the trips to Maui did seem excessive unless you were lucky enough to go) I think that characterization was wrong. After all, we are talking about the music industry, which at the time had an estimated worldwide value of ~$45 billion. If your very valuable industry was threatened by an unregulated technology that basically obviated your distribution model and ability to monetize your product, you would take steps to protect it, too, and you would have to do it in a way that was fair and transparent to everyone concerned. (And they were right to try – the worldwide value of the music industry today stands at around only $25 billion.) SDMI got to a point in September of 2000 where they invited the public to hack their six best secure digital music standards.
They were all hacked.

Which brings us to Conahan’s Second Law of Digital Media Distribution: “Digital media cannot be secured.”

I don’t mean to be flippant about this, and I hope you don’t mind me basing the Second Law on observed and anecdotal evidence, but such is the state of things:
iTunes DRM Hacked, Then Hacked Again
Hacker cracks Microsoft anti-piracy software

It is important to point out, though, that DRM is only required in an open system. You know those airport security looking things at the door of the music store that sets off an alarm when you walk out with a CD without paying? That’s DRM. It is required because anyone can walk into the store, and with an open system like that, you need to control theft by employing technology that routes people to the register before they make it to the door. By contrast, Amazon.com is a closed system. You click, and they ship via a trusted closed distribution model called the U.S. Mail. You don’t ever get to handle the CD or whatever it is you are buying until after you pay. The consuming public cannot walk into their warehouse, and so there are no airport security things at the door because there is no door. In a closed system, nobody has to implement DRM because there is little chance of intellectual property rights being compromised.

And so I read with great interest this article yesterday via moconews: Law to make iTunes compatible with Microsoft?

More than I find it interesting that congress is being called upon to further opine on the future of digital media distribution, I find it interesting that the companies creating closed distribution systems to protect the intellectual property rights of the artists and other owners of federally protected copyrighted works are the same companies being vilified for not creating an “open” system fostering healthy competition where everybody wins. More on that later.

The bottom line here is that consumers are not demanding Digital Rights Management. Nor are they demanding a legislative mandate on how they will consume content. Consumers are simply asking for content. Consumer does not mean Buyer. Consumers on the internet have proven that given the choice between an open system with no DRM, a closed system that feels unencumbered and an open system with DRM restrictions that make them feel like criminals, they will adopt each in a decreasing order of magnitude over the next; respectively, MP3 files via P2P, Ringtones via a carrier controlled channel, and any online music download service where the same file is only a click away on Limewire.

The search for industry-standard DRM is one of the biggest issues shaping mobile media because it takes a lot of time and effort to sort out and in the meantime the mob of consumers will route around any solution that feels restrictive. Quality and cost don’t matter (much, given that ringtones cost $3 and you still can’t convince 99% of consumers to buy a full-length song online for $.99) as much as convenience and ease of use. While the politicians are figuring out how to make everyone on the supply side of media happy, innovation on the demand side is going to accelerate and a new kind of media that isn’t encumbered by traditional media copyright rules will emerge.

Posted by Shawn Conahan at April 9, 2005 11:59 AM